## The Ascent of CBDCs

## Source details

**Canonical URL:** [The Ascent of CBDCs](https://www.imf.org/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs)

## Other formats

- [Markdown version](/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs/index.md)
- [Structured JSON version](/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs/index.json)
- [Bundle manifest](/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs/bundle-manifest.json)

## Bibliographic details
- Authors: ANDREW STANLEY
- Published: September 1, 2022

---

### Overview and definition
- Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by central banks.
- CBDCs are described as more secure and inherently not volatile, unlike crypto assets.
- More than half of the world’s central banks are exploring or developing digital currencies.

### History and current status
- CBDCs have been around for three decades.
- In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash, considered the world’s first CBDC; the system was eventually dropped in the early 2000s.
- As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched:
  - eNaira in Nigeria, unveiled in October 2021.
  - Bahamian sand dollar, debuted in October 2020.

### Motivations and potential benefits
- Primary motivations cited:
  - Promote financial inclusion (for example, The Bahamas sought to serve unbanked and under-banked populations across more than 30 of its inhabited islands).
  - Improve the efficiency and safety of payment systems.
- Potential benefits highlighted:
  - Create greater resilience for domestic payment systems.
  - Foster more competition, which may lead to better access to money.
  - Increase efficiency in payments and lower transaction costs.
  - Improve transparency in money flows.
  - Could help reduce currency substitution (use of a foreign currency in addition to, or instead of, a country’s own).

### Risks, constraints, and policy considerations
- Central banks must determine whether there is a compelling case to adopt CBDCs, including whether there will be sufficient demand; some central banks have decided not to adopt them for now, and many are still grappling with this question.
- Issuing CBDCs involves risks that central banks need to consider:
  - Users might withdraw too much money from banks all at once to purchase CBDCs, which could trigger a crisis.
  - Capacity to manage risks posed by cyberattacks must be weighed.
  - Ensuring data privacy and financial integrity is a critical concern.

*F&D Magazine — ANDREW STANLEY, September 2022*

---

## Content in this bundle

- **The Ascent of CBDCs**
  - [The Ascent of CBDCs (Markdown version)](/-/media/files/publications/fandd/article/2022/september/pt-the-ascent-of-cbdcs.pdf.md){rel="alternate" type="text/markdown"}
  - [The Ascent of CBDCs (PDF)](/-/media/files/publications/fandd/article/2022/september/pt-the-ascent-of-cbdcs.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/fandd/issues/2022/09/picture-this-the-ascent-of-cbdcs_